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Insight

MiFID II: life gives you lemons, make lemonade

MiFID II. It’s 3000-plus pages of complex regulations that are interlinked with other regulatory initiatives such as MAD, PRIIPs and EMIR. It will impact just about every part of your business – from your organizational structures and IT systems to your business model itself. It will affect the entire financial market across Europe. And it’s one of the biggest opportunities coming your way over the next couple of years.

By acting early, adopting a structured approach and taking three vital steps, you can claim a first-mover advantage and get a head-start on your competition. It’s all about being prepared, and being thorough.

Point 1: Focus. Focus. Focus.

Managing scope is a challenge in every big change-management project. Especially in a project this size, you have a lot of things to cover, but it is important not to try to do everything – just everything that needs to be done now. Stay focused. Identify the core areas that have to be addressed, and focus on them. If you start fixing all your legacy issues at the same time, you create a bad case of scope creep. That risks missing deadlines, and with a mandatory change like MiFID II, missing deadlines is not an option.
Core areas are also essential because many other areas build on them. Think about data systems, for example. You can’t extract the data from a system until the system is implemented and operating. So identify your core areas, deal with them, and then build on top of that.

Point 2: Decide your business and IT architecture early on

Your business and IT architecture is a vital foundation. You need to decide on it early, and get it right. You don’t get the luxury of revisiting it later on – you are stuck with the one you set at the start. So establishing the right business and IT architecture is a vital first step. It can be a good idea to get an outside opinion in this area, from an experienced partner who understands the challenges involved.

Point 3: Change is everywhere.

As we mentioned earlier, the breadth of MiFID II’s impact is hard to overstate. Everything is affected, from business models to IT systems and organizational structures, to the individual people dealing with your clients. This is an enormous change-management project. And attention to detail is vital.
Just take client-service interactions. Your staff needs to be fully briefed if you expect them to answer your clients’ questions. It is important to get all your people on board, explain the change and get their buy-in – and then use that opportunity to implement improved procedures for taking care of your clients.

Great business opportunity.

That brings us to the big pay-off. MiFID II is more than a directive and regulatory shift. It is a chance to improve your processes and the way you deal with clients. It brings in greater transparency, improved communication, an open environment. Great opportunity. The companies that embrace this can gain a tremendous advantage. The ones that resist or who move slowly will lose out.

It really can be a matter of corporate survival. Business models for some companies will change beyond recognition, so those companies need to transform in order to survive. But if they do embrace the change, with a structured approach and attention to detail, they will win in the new financial ecosystem.

MiFID II flows from an EU directive, and will be implemented differently through regulation in every EU country. Even here in the Nordic region, there will be significant variations between countries. Sweden, for example, looks set to take a stricter view than its Nordic neighbours. And especially for companies working across national borders, the specific requirements of MiFID II in each market make it important to have an informed partner that knows what is happening where.

There is a lot to take in, and a lot to keep track of. And the challenges vary depending on your company. A toolbox like our MiFID II Compass helps identify the MiFID II articles your company needs to address, right from pre-study stage. This structure provides a clear compliance trail, so your senior leadership can keep a close eye on progress without having to rely on asking subordinates.

Yes, there is a lot to remember, and a lot to do. But remember, this is an opportunity. At BearingPoint, we’ve been working closely with companies large and small, all across Europe, since before MiFID I, and all through the MiFID II process. We’ve seen the challenges, and know how successful companies can take them on and come out stronger.